You’ve drawn up a comparative analysis of the cost of in-house warehousing compared to that of outsourcing your order fulfilment processes, and you’ve decided to go with outsourcing. This can be an economically viable option however, if not carried out well, can often end up being significantly costly.
It is imperative to be careful of who you entrust your order fulfilment services with because this will directly affect customer satisfaction. So, when outsourcing order fulfilment, how can your business avoid the three most common mistakes?
Selecting a fulfilment partner recklessly
Selecting your partner on price alone
It is always tempting to go for a partner that charges significantly lower rates, however always do your background checks because opting for a low priced company may cost you more in the long run.
Investigate why companies are able to offer extremely low prices, is it because they may not have updated technology, have low controls and metrics, or have the least amount of customer service? While price isn’t always an indicator of how good or bad a company’s service may be, very low prices may raise a red flag – so do your homework.
Going for the most convenient location to your business
Choosing the fulfilment company close to your business may sound like a great idea, but a location close to you shouldn’t be the only thing taken into consideration. Selecting a location closer to your customers will help speed up delivery time and may end up being a more beneficial option.
Not planning for implementation
Not including your fulfilment provider in early discussions and planning sessions
Fulfilment providers do a lot more than just pick, pack and send your products to customers. They can provide a vital competitive edge in today’s marketplace if you allow them to contribute to early discussions and planning sessions.
Not setting clear performance expectations
100 percent fulfilment rate is always the goal. However, errors happen in the fulfilment process. The key is understanding why they happen and fixing the root cause so the same errors are not repeated. Mutually agree with your partner on reasonable performance expectations given your volumes, the level of automation in the fulfilment warehouse and other factors. Then work out a process for KPI management.
Lack of management after initiation
Not sharing relevant data
Not disclosing important information may be a good competitive strategy, however it may derail a solid outsourcing order fulfilment strategy. Fulfilment providers specialise in running operations across a wide span of customers. Trust them to take the information you provide and use it in your best interest.
Overlooking the need for regular communication
For the fulfilment process to operate successfully over time, the partnership players need to be in sync on KPIs and expectations. Agree on the key metrics to measure and how often performance reports will be delivered. This reporting process should be supplemented by regular meetings to review performance and address any tactical or strategic issues that may arise.
Failing to communicate
Many companies hold back information when it comes to sharing sales and inventory-related projections. However, letting your fulfilment partner know about your projections and seasonal demands ahead of time is crucial so that it can make proper arrangements to be able to handle the influx of orders about to come its way. The fulfilment company will need time to adjust and flex their fulfilment capacity. This is usually something they can get done with ease when it has advanced notice but can be a difficult task when given short notice. So communication is key.
All of these mistakes can directly impact customers’ satisfaction. When customers are unsatisfied with your order fulfilment process, it is unlikely that they will buy from your company again. Investing a little more time and cash upfront will almost always benefit you in the long run. So, take your time and pick the fulfilment partner that’s right for your business. You don’t want to rush this highly strategic decision. Once you choose a partner, trust and leverage their expertise. Seek their help in optimising the fulfilment process. Meet regularly and share data freely about changes to the business and the impact on upcoming sales demand. The more relevant information your partner has, the better they can serve you.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.